Emerging as one high-end EV stock to own, investors may be wondering whether China-based XPeng (NYSE:XPEV) is worth buying. I think that’s a fascinating question to explore, considering the impressive growth the Chinese EV market has seen. Some recent headlines around China EVs and hybrids now surpassing 50% penetration of all new vehicle sales is impressive. This is a market that’s heavily EV-focused. For companies like XPeng, that should be a great thing.
Notably, XPeng has continued to impress analysts and investors with its strong deliveries growth. The company has shown resilience in previous downturns, and is looking to continuing to innovate. XPeng’s recent expansion of its X NGP advanced driver assistance system to all cities in mainland China is notable. This system offers features like traffic light recognition, lane changes and overtaking, akin to Tesla’s (NASDAQ:TSLA) “Full Self-Driving” technology.
Following the company’s strong deliveries report in July, in which the company reported delivering 11,145 units, and its strong market share presence in China, let’s dive into why investors may or may not want to consider this stock. After all, there are headwinds to price in as well.
Aside from the company’s core EV business, there are other key catalysts XPeng investors are clearly watching. One such catalyst is the company’s AI robot, which was recently unveiled by the company’s CEO in a rather impressive video. This robot is shown efficiently managing reservations for the Mona M03, Xpeng’s newest hatchback EV. It handled every step along the way, aside from payment, showcasing its flexibility and precision and managing all tasks through a smartphone screen. XPeng’s CEO noted that while the robot couldn’t perform face recognition for payments, it successfully completed nearly all other reservation processes.
On Aug. 8, Xpeng began pre-orders for the Mona M03, offering a RMB 3,000 discount for a RMB 99 deposit. By Aug. 9, production of the Mona M03 had commenced, with preparations underway for swift deliveries. The all-electric sedan debuted on July 3 and the official launch is anticipated in two weeks. Xpeng also operates in flying cars and robotics.
Established in 2016, XPeng Robotics was able to secure $100 million Series A funding in 2022. In the same year, XPeng introduced the PX5 bipedal robot, which shows capabilities like overcoming obstacles and walking. The company plans to integrate its advanced EV technologies into future robotics, including Xnet, XEEA and XGPT.
Volkswagen on the Move
Xpeng’s tech partnership with Volkswagen (OTCMKTS:VWAGY) has advanced, as hundreds of VW engineers started at Xpeng’s Guangzhou HQ. The $700 million Volkswagen investment in XPeng was announced in July of last year, enhancing the two companies’ collaboration.
Importantly, Volkswagen and XPeng also plan to create two EV models based on the G9 platform. On Feb. 29, they signed an agreement to speed up development and cut costs. Volkswagen also committed 2.5 billion euros to expand its Hefei center where the first model, a mid-size SUV, will be produced starting in 2026.
On April 17, Xpeng and Volkswagen agreed to develop and integrate Xpeng’s E/E architecture into Volkswagen’s China Main Platform (CMP) for EVs starting in 2026. This partnership highlights foreign automakers utilizing Chinese technology.
Luxury EV in Australia
The Zeekr 009, expected to debut in Australia at around $150,000, will compete with the Lexus LM hybrid, starting above $160,000. Jason Clarke of TrueEVnoted strong local interest for the X9, listed on XPeng Australia’s website, with hundreds of inquiries received in under two weeks. While XPeng is considering the X9’s Australian launch, Clarke mentioned ongoing discussions about certification costs and modifications for right-hand drive, crucial for the vehicle’s adaptation to Australian standards.
Xpeng aims to become a leading EV brand in Australia, planning to launch a mid-sized SUV in late 2024. Clarke stated the company targets top-five status in the market with a focus on premium quality, aspiring to be Australia’s top luxury EV brand.
Mr. Clarke acknowledged Xpeng’s ambitious goals, noting that building brand awareness in Australia is the first step. The mid-sized G6 SUV is set for a September launch and will have a starting price under $60,000. It will compete with models like the Tesla Model Y, Toyota (NYSE:TM) bZ4X and Hyundai (OTCMKTS:HYMLY) Ioniq 5. Xpeng aims to differentiate itself without engaging in a price war with cheaper Chinese EV brands.
XPEV Stock May Be a Decent Risk-Reward Bet
When it comes to autonomous technology Tesla is the hottest topic but XPeng is emerging as a strong competitor in China. It has become the first company from mainland China to deploy semi-autonomous driving systems in the country.
While XPEV stock continues to trade near its 52-week low, there are reasons why investors are bullish on this name. In my view, the company’s growth profile is certainly impressive. If margins can pick up in its core market, I think there’s plenty of future upside potential. At this beaten-down level, particularly for investors willing to ease into a position, XPEV stock is a good pick.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.